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With the raising 4G costs and keen market competition, China Mobile’s net profit for the year ended December 2013 dropped 5.9% in 14 years, the company posted on Thursday.
The net profit attributable to equity shareholders was RMB121.7 billion, down 5.9% to 121.7 billion yuan ($19.6 billion). Revenue rose 8.3% to 630.2 billion yuan last year but was largely offset by surging expenses which grew 15% to 495 billion yuan.
“We also faced a number of challenges, including the further accelerated substitution effect of Over The Top (OTT) products on the traditional communications business, and a more saturated traditional communications market with
fiercer competition, all of which added to the Group’s operational pressure,” the company Chairman said.
Aiming to become the world’s greatest 4G network, the company is determined to spare no effort to build a superior 4G network with 500,000 base stations around the globe.
The number of its 3G subscribers increased by 104 million in last year boosted by sales of TD-SCDMA mobile phones, while its income from wireless data traffic contributed to 18.3 percent of its revenue from telecom service.
It also plans to build the largest 4G network in the world with 500,000 base stations by the end of 2014, besides China Mobile will spend more than 225.2 billion yuan ($36.2 billion) this year, up nearly 22% from 2013.
About 33% or over 74 billion yuan of the capex will be used for 4G network investments, said chief financial office Xue Taohai.
According to the company, it will aimed to increase handset subsidies by 29% to 34 billon yuan this year and the subsidies will be used for all models of phones, including the iPhone – which the company launched in January.
The capex budget will also go to investments in 3G, transmission networks, support systems and business developments.
China Mobile, which launched TD-LTE in December, has a total of 1.34 million 4G subscribers in February, with average revenue per 4G user at 180 yuan per month.The total mobile subscriber base reached 776 million in February, of which over 215 million were 3G users.
The Group aimed to push forward VoLTE live network testing to realize commercialization of VoLTE by the end of this year, hence solidifying its first mover advantage.